SEC Filings

10-Q
MEDTRONIC PLC filed this Form 10-Q on 09/01/2017
Entire Document
 


Continued acceptance and future growth of Guardian Connect continuous glucose monitoring (CGM) system which displays information directly to a smartphone. This system received CE mark in 2016 and has launched internationally, with an expected U.S. launch in the second half of fiscal year 2018.
Continued partnership with UnitedHealthcare as the preferred in-network provider of insulin pumps, giving their members access to our advanced diabetes technology and comprehensive support services.
Continued partnership and future growth of our outcomes-based agreement with Aetna, where a component of our pump reimbursement will now be based on successfully meeting clinical improvement thresholds as part of our value-based healthcare solutions.
OPERATIONS BY MARKET GEOGRAPHY
The tables below include net sales by market geography for each of our operating segments for the three months ended July 28, 2017 and July 29, 2016:
 
Three months ended July 28, 2017
 
Three months ended July 29, 2016
(in millions)
U.S.(1) 
 
Non-U.S. Developed Markets(2)
 
Emerging Markets(3)
 
U.S.(1) 
 
Non-U.S. Developed Markets(2)
 
Emerging Markets(3)
Cardiac and Vascular Group
$
1,333

 
$
887

 
$
426

 
$
1,297

 
$
829

 
$
392

Minimally Invasive Therapies Group
1,245

 
865

 
376

 
1,235

 
863

 
326

Restorative Therapies Group
1,221

 
394

 
194

 
1,207

 
384

 
181

Diabetes Group
243

 
167

 
39

 
263

 
155

 
34

Total
$
4,042

 
$
2,313

 
$
1,035

 
$
4,002

 
$
2,231

 
$
933

(1)
U.S. includes the United States and U.S. territories
(2)
Non-U.S. developed markets include Japan, Australia, New Zealand, Korea, Canada, and the countries of Western Europe
(3)
Emerging markets include the countries of the Middle East, Africa, Latin America, Eastern Europe, and the countries of Asia that are not included in the non-U.S. developed markets, as defined above
For the three months ended July 28, 2017, net sales in the U.S. increased 1 percent; non-U.S. developed markets increased 4 percent; and emerging markets increased 11 percent, as compared to the corresponding period in the prior fiscal year. Currency had an unfavorable impact of $33 million on net sales for the three months ended July 28, 2017, as compared to the three months ended July 29, 2016 when using the average exchange rates in effect during the prior fiscal year period. Net sales growth in the U.S. was led by growth in the Cardiac and Vascular Group, while growth in non-U.S. developed markets was led by strong performance in the Cardiac and Vascular Group. Emerging market sales growth was driven by solid performance in all of our groups.
COSTS AND EXPENSES
Cost of Products Sold
 
Three months ended
(in millions)
July 28, 2017
 
July 29, 2016
Net sales
$
7,390

 
$
7,166

Cost of products sold
2,349

 
2,261

Gross profit
$
5,041

 
$
4,905

 
 
 
 
Gross margin percent
68.2
%
 
68.4
%
We continue to focus on reducing our costs of production through channel optimization, supply chain management, and changes to our manufacturing network. For the three months ended July 28, 2017 and July 29, 2016, gross margin percent was 68.2 percent and 68.4 percent, respectively. The slight decrease in gross margin percent in the first quarter of fiscal year 2018 was due to the unfavorable impact of currency exchange.

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